[OPE-L:5753] Re: the infinite quantity of logically plausible social theories theorem (IQLPSTT)

From: Steve Keen (s.keen@uws.edu.au)
Date: Sat Jun 02 2001 - 21:43:27 EDT


this is a very important issue that you raise, and I want to address the 
reason why it's an argument for making sure that your foundations are 
theoretically consistent!

Basically, I agree that as you put it "if it can be shown that a theory is 
logically plausible and consistent, the merit of any one of this set of 
theories can not be judged based on this alone. Indeed, it only establishes 
a trivial result."

However, if the obverse applies--"if it can be shown that a theory is 
logically implausible and inconsistent"--then if you plough on regardless, 
at some point that implausibility and inconsistency will leap out and bite you.

For neoclassicals, one of the many points at which that arises is the 
so-called Sonnenshein-Mantel-Debreu conditions to allow aggregation of 
individual utilities to develop social utility. Those conditions amount to 
saying that this aggregation is possible if there is one consumer and one 
commodity, but no more--in other words, that aggregation *isn't* possible.

This of itself shouldn't be surprising--the notion that one cannot compare 
the subjective utilities two individuals get from consuming the same 
quantity of a substance is built in to their Bentham/Say foundations.

But what they do in response to this is 'surprising'--if you try to 
interpret them as scientists. They gloss over this, develop a logically 
coherent theory of the individual and then LEAP over this logical conundrum 
to argue that the same analysis applies at the social and systemic level.

The trouble is, having leapt over this inconsistency, it can't help but 
reappear in myriad other places--such as their theory of finance. And the 
inconsistency is there for all to see (if the wool isn't pulled down too 
hard over the eyes), making a mockery of everything they say after week 
three of lectures.

There are numerous other such flaws in their thinking, and the irony is 
that because it is such a monist theory, every little error unravels the 
entire structure on its own. Thus they can only explain distribution if 
returns to scale are constant; their theory of competition requires 
collusion to explain how price can equal marginal cost (a new one I've 
located); their theory of production only works if all industries are 
identical (Sraffa's contribution)...

In the end, this isn't a science--it's a religion.

Now the same thing applies to Marxian economics *if* the proposition that 
labour is the only source of value, and value the only source of profit, is 
taken to be of central significance. If so, then you hit the TP brick wall 
as soon as you try to produce a more sophisticated analysis than one which 
presumes there is just one industry and one commodity.

To give Marxian economists their infinite due over neoclassicals, this is 
not an issue that they've simply waved a magic wand over (like the SMD 
conditions) and carried on willy-nilly. This is a far, far more honest a 
way to proceed--to say that, yes, there is a problem, and we're going to 
try to solve it or find a way to resolve it.

But surely one hundred and thirty years of trying, without finding a 
solution that someone else could not find a logical flaw in, is a sign that 
maybe this problem *is* insoluble--and that maybe therefore there is 
something wrong with the initial presumption that "labour is the only 
source of value, and value the only source of profit"...

This is the perspective that Sraffians take on Marx--and those devoted to 
this presumption then think that the flaw lies with the Sraffians for 
analysing Marx statically, when he was actually a dynamic theorist.

I *am* a dynamic theorist, and--for quite different reasons to Sraffians--I 
expect that this dynamic riposte could also be demolished if it were 
expressed properly as a dynamic model. This is not because I've done that 
work, but because from a quite different perspective, I believe that Marx's 
true philosophical foundations yield the result that "labour and 
commodities are the joint sources of value, and value is the only source of 
profit" (and that this foundation can then be consistently extended to 
realise financial profit, etc.).

Now I know I've got buckley's of convincing anyone on this list of that, 
and by and large, I don't try. But because I don't have to solve the TP to 
do further work, I do further work (I might add that I think this is how 
Allin et al approach this, since they treat the LTV as a statistical 
approximation, and can therefore do much more elaborate work without 
tripping over their own toes).

This is also the approach of the Sraffians--they simply accept that profit 
exists without musing as to where it comes from, and get on with it. I 
critisise their use of static analysis, as Gary and Ajit know well (and 
they appreciate my position in a fashion that lets us have meaningful and 
helpful dialogue about it). It's also the case with Post Keynesians, who 
almost ignore the need for philosophical foundations in a way that I think 
leaves much of their arguments floating in mid air.

But with Marxists who take the propositions about the source of value as 
foundational? Well, I think that in another century's time, their 
descendants will *still* be trying to solve the transformation problem.

At 11:17 PM 6/2/01 Saturday, you wrote:
>There has been much discussion on OPE-L about
>whether Marx's theory of value is internally
>consistent and logical. I don't want to re-hash those
>arguments here. Rather I want to ask the following:
>* _even if_  Marx's theory of value (and/or variations
>   thereof) are shown to be logically coherent and
>   consistent, what does that tell us? In other words:
>   so what?
>I believe it can be easily demonstrated that there
>are potentially:
>a) an infinite quantity of social theories which are
>logically implausible and inconsistent;
>b) an infinite quantity of logically plausible social
>I will call b) the "infinite quantity of logically plausible
>social theories theorem" (IQLPSTT).
>Any reader of *science fiction* knows the validity
>of the IQLPSTT.
>Once we accept the validity of the IQLPSTT, we
>must recognize that if it can be shown that a
>theory is logically plausible and consistent,
>the merit of any one of this set of theories can
>not be judged based on this alone. Indeed, it
>only establishes a trivial result.
>Why is this?  At the risk of stating the obvious,
>it is because social theory seeks to explain
>social dynamics in a *particular* context.
>Thus, there might be an infinite variety of theories
>to explain social life unique to *another galaxy*
>but none of these theories -- even when logically
>plausible and consistent -- can be used to
>comprehend social organization for humanoids
>on this planet during our epoch.
>One must not *merely* ask whether a theory is
>logically consistent; rather, one must ask whether
>a theory is capable of comprehending the essential
>nature and reality of the subject matter.
>Suppose then that the subject matter (i.e. WHAT
>CAPITALISM.  The 'test', ultimately, for such a
>theory is HOW WELL it comprehends the subject
>matter. E.g. are important and necessary relations
>specific to the nature of the subject matter
>(capitalism) explained?  How well, then, does
>the theory explain the history of the subject
>(capitalism)?   Are there ways to empirically
>validate or invalidate essential propositions of
>the theory?  What sort of 'research programme'
>does a particular social theory generate? E.g.
>does it open up new areas of research by its
>advocates or does it have a 'degenerate' research
>It is for the above reasons that I remain somewhat
>mystified by attempts to prove that Marx's theory
>of value is internally consistent.  Surely, all of
>those on one side of the debate have already come
>to that conclusion anyway!  And what's more
>important politically -- answering the charges by
>economists about Marx's theory _or_ developing
>and deepening our understanding of capitalism
>with the object then of surpassing that mode of
>production?  I would call that a 'no brainer'
>in the sense that the answer should be obvious to
>Relatedly, in answer to Ajit's [5742], I would assert
>the following:  there are many who will be convinced
>by either Sraffian and/or the Althusserian critiques
>of value theory that you present; many more (on
>this list) are unconvinced.  You have presented
>arguments to them that they find, for the most
>part, unconvincing and they have presented counter-
>arguments to you that we all know you find
>unconvincing. They're not trying to avoid your
>critique any more that you are trying to avoid their
>critique.  But, at some point, there has to be the
>recognition by all of the obvious: you're not
>convincing them and they're not convincing you.
>So, at that point, the sensible thing to do is just
>to move on to discuss other matters, right?
>After all, what's the point in anyone from either
>side of a debate knocking their head against a wall?
>This doesn't mean that we can or should forget
>about these disagreements or never raise them
>again, but it does suggest that there are more
>productive areas of possible discourse. E.g. since
>Rakesh mentioned the world market,  perhaps
>we should discuss theories (and realities) of
>international trade. Steedman and Metcalfe wrote
>some important stuff on that subject way back
>in 1979 (including an excellent critique by Steedman
>of H-O-S theory.)  Have there been any more
>recent investigations of that subject by surplus
>approach theorists?  What do you think about the
>arguments of Eric Sheppard and Trevor Barnes in
>_The Capitalist Space Economy: Geographical
>Analysis After Ricardo, Marx and Sraffa_ (London,
>Unwin Hyman, 1990) which is broadly sympathetic
>to surplus approach perspectives?  Have they or
>others developed the "Extensions" that are
>suggested near the end of the book (pp. 298-
>300)  concerning 'complexities of the labour
>market, finance capital and credit, and the state'?
>In other words, what I am suggesting as a possible
>line of inquiry (related to the first part of this post)
>is to discuss both how well different theories
>explain the realities of capitalism (when examined
>globally as a mode of production) and the types
>of questions and lines of research that they are
>concerned about developing (i.e. the breadth of
>respective research programmes.)  Perhaps in
>discussing these issues we may find that we
>are interested in many of the same issues (or
>maybe not.) In any event, it would at least be a
>new line of inquiry for us (and, indeed, I'm not
>really aware that there has ever been much of a
>'cross-paradigm' discussion by Marxians -- in any
>forum -- of the merits of differing research
>In solidarity, Jerry

Home Page: http://www.debunking-economics.com
Dr. Steve Keen
Senior Lecturer
Economics & Finance
Campbelltown, Building 11 Room 30,
School of Economics and Finance
s.keen@uws.edu.au 61 2 4620-3016 Fax 61 2 4626-6683
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